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Balance Sheet Information | 12 Months Ended
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Dec. 31, 2012
Balance Sheet Information |
Balance Sheet Information | 6. Balance Sheet Information Short-Term Investments Available-for-sale securities consist of the following (in thousands):
|  | December 31, 2012 |
--- | --- | --- | ---
|  | Amortized Cost |  | Gains in Accumulated Other Comprehensive Income |  | Losses in Accumulated Other Comprehensive Income |  | Estimated Fair Value |
Treasury bills |  | $ | 184,102 |  | $ | 76 |  | $ | — |  | $ | 184,178 |
Government agency securities |  |  | 8,056 |  |  | — |  |  | — |  |  | 8,056 |
Total available-for-sale securities |  | $ | 192,158 |  | $ | 76 |  | $ | — |  | $ | 192,234 |
During the year ended December 31, 2012, available-for-sale securities were sold for total proceeds of $244.9 million. The gross realized gains on these sales were minimal for the year ended December 31, 2012. For purpose of determining gross realized gains, the cost of securities sold is based on specific identification. The change in the net unrealized holding loss on available-for-sale securities amounted to $0.1 million for the year ended December 31, 2012, and has been included in accumulated other comprehensive income. The tax impact on the unrealized gains, which is excluded from the table above, was less than $0.1 million.
|  | December 31, 2011 |
--- | --- | --- | ---
|  | Amortized Cost |  | Gains in Accumulated Other Comprehensive Income |  | Losses in Accumulated Other Comprehensive Income |  | Estimated Fair Value |
Treasury bills |  | $ | 70,147 |  | $ | 46 |  | $ | (1 | ) | $ | 70,192 |
Government agency securities |  |  | 88,585 |  |  | 62 |  |  | (6 | ) |  | 88,641 |
FDIC guaranteed corporate debt |  |  | 114,641 |  |  | 124 |  |  | (7 | ) |  | 114,758 |
Total available-for-sale securities |  | $ | 273,373 |  | $ | 232 |  | $ | (14 | ) | $ | 273,591 |
During the year ended December 31, 2011, available-for-sale securities were sold for total proceeds of $707.6 million. The gross realized gains on these sales were $0.4 million for the year ended December 31, 2011. For purpose of determining gross realized gains, the cost of securities sold is based on specific identification. The change in the net unrealized holding gain on available-for-sale securities amounted to $0.2 million for the year ended December 31, 2011, and has been included in accumulated other comprehensive income. The tax impact on the unrealized gains, which was excluded from the table above, was $0.1 million. As of December 31, 2012 we did not hold any short-term investments that were in a loss position. As of December 31, 2011 we had $33.5 million in short-term investments that had an aggregate unrealized fair value loss of less than $0.2 million none of which had been in an unrealized loss position for 12 months or longer. For investments that were in an unrealized loss position, we held the securities through maturity. Contractual maturities of available-for-sale debt securities as of December 31, 2012 are as follows (in thousands):
|  | Estimated Fair Value |
--- | --- | --- | ---
Due in one year or less |  | $ | 120,621 |
Due in 1 - 2 years |  |  | 71,613 |
Total investments in debt securities |  | $ | 192,234 |
Actual maturities may differ from contractual maturities because some borrowers have the right to call or prepay obligations with or without call or prepayment penalties. Restricted Cash As of December 31, 2012 and 2011, restricted cash consisted of $2.0 million and $0.6 million, respectively, which serves as collateral for bank guarantees that provide financial assurance that the Company will fulfill certain customer obligations. This cash is held in custody by the issuing bank, and is restricted as to withdrawal or use while the related bank guarantees are outstanding. Accounts Receivable, Net Accounts receivable are shown net of the allowance for doubtful accounts of $0.5 million as of December 31, 2012 and 2011. Inventories (in thousands):
|  | December 31, |
--- | --- | --- | ---
|  | 2012 |  | 2011 |
Materials |  | $ | 36,523 |  | $ | 57,169 |
Work in process |  |  | 13,363 |  |  | 20,118 |
Finished goods |  |  | 9,921 |  |  | 36,147 |
|  | $ | 59,807 |  | $ | 113,434 |
Property, Plant and Equipment (in thousands):
|  | December 31, |  |
--- | --- | --- | --- | ---
|  | Estimated Useful Lives
|  | 2012 |  | 2011
Land |  | $ | 12,535 |  | $ | 12,535 |  |
Building and improvements |  |  | 49,498 |  |  | 34,589 |  | 10 - 40 years
Machinery and equipment |  |  | 110,150 |  |  | 102,241 |  | 3 - 10 years
Leasehold improvements |  |  | 5,677 |  |  | 6,025 |  | 3 - 7 years
Gross property, plant and equipment at cost |  |  | 177,860 |  |  | 155,390 |  |
Less: accumulated depreciation and amortization |  |  | 79,558 |  |  | 69,323 |  |
Net property, plant and equipment |  | $ | 98,302 |  | $ | 86,067 |  |
For the years ended December 31, 2012, 2011 and 2010, depreciation expense was $11.3 million, $8.2 million and $7.1 million, respectively. Goodwill and Indefinite-Lived Intangible Assets In accordance with the relevant accounting guidance related to goodwill and other intangible assets, we conducted our annual impairment test of goodwill and indefinite-lived intangible assets during the fourth quarters of 2012 and 2011, using October 1st as our measurement date, and utilizing a discounted future cash flow approach as described in Note 1. This was consistent with the approach used in previous years. Based upon the results of such assessments, we determined that no goodwill and indefinite-lived intangible asset impairment existed as of October 1, 2012 and 2011, respectively. Changes in our goodwill are as follows (in thousands):
|  | December 31, |
--- | --- | --- | ---
|  | 2012 |  | 2011 |
Beginning Balance |  | $ | 55,828 |  | $ | 52,003 |
Write-off (see Note 3. Discontinued Operations) |  |  | — |  |  | (10,836 | )
Acquisition (see Note 5. Business Combinations) |  |  | — |  |  | 14,661 |
Ending Balance |  | $ | 55,828 |  | $ | 55,828 |
As of December 31, 2012 and 2011, we had $2.9 million of indefinite-lived intangible assets consisting of trademarks and tradenames, which are included in the accompanying Consolidated Balance Sheets in the caption intangible assets, net. Intangible Assets
|  | December 31, 2012 |  | December 31, 2011 |
--- | --- | --- | --- | --- | ---
(in thousands) |  | Purchased technology |  | Other intangible assets |  | Total intangible assets |  | Purchased technology |  | Other intangible assets |  | Total intangible assets |
Gross intangible assets |  | $ | 109,248 |  | $ | 19,635 |  | $ | 128,883 |  | $ | 109,248 |  | $ | 19,635 |  | $ | 128,883 |
Less accumulated amortization |  |  | (93,436 | ) |  | (14,473 | ) |  | (107,909 | ) |  | (89,620 | ) |  | (13,381 | ) |  | (103,001 | )
Intangible assets, net |  | $ | 15,812 |  | $ | 5,162 |  | $ | 20,974 |  | $ | 19,628 |  | $ | 6,254 |  | $ | 25,882 |
The estimated aggregate amortization expense for intangible assets with definite useful lives for each of the next five fiscal years is as follows (in thousands):
2013 |  | $ | 3,556 |
2014 |  |  | 2,919 |
2015 |  |  | 2,752 |
2016 |  |  | 2,530 |
2017 |  |  | 1,544 |
In accordance with the relevant accounting guidance related to the impairment or disposal of long-lived assets, we performed an analysis as of December 31, 2012 and 2011 of our definite-lived intangible and long-lived assets. As a result of the delay in filing this report and because our last annual impairment test was performed as of October 1, 2012, we were required to evaluate the impact of events and circumstances occurring through the date of the filing of this report. We considered several factors including our current year financial projections, changes in industry or market conditions, political factors, legal factors, regulatory factors, whether triggering events exist, and performed other analyses to assess whether our goodwill and/or long-lived assets are impaired. Based on our evaluation of the foregoing considerations, we concluded that no impairment exists through the date of this filing. Cost Method Investment On September 28, 2010, Veeco completed a $3 million investment in a rapidly developing organic light emitting diode (also known as OLED) equipment company (the "Investment"). Veeco invested an additional $10.3 million and $1.2 million in the Investment during 2012 and 2011, respectively. As of December 31, 2012, we have a 15.3% ownership of the preferred shares, and effectively hold a 12.0% ownership interest of the total company. Since we do not exert significant influence on the Investment, this investment is treated under the cost method in accordance with applicable accounting guidance. The fair value of this investment is not estimated because there are no identified events or changes in circumstances that may have a significant adverse effect on the fair value of the investment and the investment does not meet the definition of a publicly traded company. This investment is recorded in other assets in our Consolidated Balance Sheets as of December 31, 2012 and 2011. In 2013, Veeco invested an additional $1.6 million in the Investment. Accrued Expenses and Other Current Liabilities
|  | December 31, |
--- | --- | --- | ---
(in thousands) |  | 2012 |  | 2011 |
Payroll and related benefits |  | $ | 14,581 |  | $ | 19,017 |
Sales, use and other taxes |  |  | 6,480 |  |  | 6,315 |
Customer deposits |  |  | 32,719 |  |  | 57,075 |
Warranty |  |  | 4,942 |  |  | 8,731 |
Restructuring liability |  |  | 1,875 |  |  | 956 |
Other |  |  | 13,663 |  |  | 14,532 |
|  | $ | 74,260 |  | $ | 106,626 |
Accrued Warranty Typically, we provide our customers a one year manufacturer's warranty from the date of final acceptance on the products they purchase from us. We estimate the costs that may be incurred under the warranty we provide for our products and recognize a liability in the amount of such costs at the time the related revenue is recognized. Factors that affect our warranty liability include product failure rates, material usage and labor costs incurred in correcting product failures during the warranty period. Changes in our warranty liability during the year are as follows (in thousands):
|  | December 31, |
--- | --- | --- | ---
|  | 2012 |  | 2011 |
Balance as of the beginning of year |  | $ | 8,731 |  | $ | 8,266 |
Warranties issued during the year |  |  | 3,563 |  |  | 7,366 |
Settlements made during the year |  |  | (7,060 | ) |  | (8,462 | )
Changes in estimate during the period |  |  | (292 | ) |  | 1,561 |
Balance as of the end of year |  | $ | 4,942 |  | $ | 8,731 |
In the current year's presentation we no longer include certain accrued installation costs in the accrued warranty balance; therefore, in order to conform the balance to current year presentation, we have reclassified $1.047 million and $0.972 million in 2012 and 2011, respectively, of the beginning balance of accrued warranty to accrued installation which, along with accrued warranty, is also a component of accrued expenses and other current liabilities. Accumulated Other Comprehensive Income The components of accumulated other comprehensive income are (in thousands):
December 31, 2012 |  | Gross |  | Taxes |  | Net |
--- | --- | --- | --- | --- | --- | --- | ---
Translation adjustments |  | $ | 7,040 |  | $ | (339 | ) | $ | 6,701 |
Defined benefit pension plan |  |  | (1,285 | ) |  | 510 |  |  | (775 | )
Unrealized gain (loss) on available for sale securities |  |  | 76 |  |  | (29 | ) |  | 47 |
Accumulated other comprehensive income |  | $ | 5,831 |  | $ | 142 |  | $ | 5,973 |
December 31, 2011 |  | Gross |  | Taxes |  | Net |
--- | --- | --- | --- | --- | --- | --- | ---
Translation adjustments |  | $ | 8,111 |  | $ | (1,022 | ) | $ | 7,089 |
Defined benefit pension plan |  |  | (1,069 | ) |  | 431 |  |  | (638 | )
Unrealized gain (loss) on available for sale securities |  |  | 218 |  |  | (79 | ) |  | 139 |
Accumulated other comprehensive income |  | $ | 7,260 |  | $ | (670 | ) | $ | 6,590 |

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